Theo Oerlemans, chief executive of Nigeria LNG Ltd., the operating company that runs Nigeria's huge liquid natural-gas project, said the company has terminated the sales contract it signed in 1992 with Distrigas (Cabot group) of the United States.

The Paris energy weekly Petrostrategies reported that Mr. Oerlemans had announced the scrapping of the contract at a natural-gas seminar in Paris last week.Petrostrategies said the news came as a surprise, especially since there is no indication as to whom will buy the 700 million cubic meters of liquid natural gas intended originally for Distrigas.

Nigeria LNG is offering this volume plus another 1.3 billion cubic meters a year of gas that the planned Bonny facility is expected to produce to Turkey's Botas, Gaz de France and Spain's Enagas, Petrostrategies said.

The latter two companies already have contracted to buy 500 million and 1 billion cubic meters a year of liquid natural gas but are unwilling to pay the price that Nigeria LNG is said to be asking.

Petrostrategies said it understands that contentious issues surfaced between Nigeria LNG and Distrigas.

The Nigerians wanted to sell their output on a cost, insurance and freight basis but Distrigas has a carrier (the Gamma) and already has signed a free- on-board agreement.

The other Nigerian contracts are on a cost, insurance, and freight basis, Petrostrategies said.

Nigeria LNG also voiced concerns about the future of gas prices on the U.S. market, the report said.

Finally, Nigeria LNG officials were reportedly less than pleased when Distrigas contracted to buy 2.4 billion cubic meters a year of liquid natural gas from the Trinidad and Tobago project, according to Petrostrategies.

Distrigas also has a contract with Algerian oil company Sonatrach to buy around 17 cargoes a year of LNG. This expires in 2003 and there has been speculation that Distrigas would not renew it since liquid natural gas from Nigeria and Trinidad and Tobago would more than cover the capacity of its Everett regasification terminal.